Legal Blog

Court Provides Analysis of s. 17(1) of the Mortgages Act

2468390 Ontario Inc. v. 5F Investment Group Inc. 2017 Ont SCJ

A mortgagor failed to pay principal after maturity. The mortgagee issued a notice of sale, claiming principal and interest plus an additional 3 months interest as bonus. The mortgagee had to rely upon section 17(1) of the Mortgages Act because the mortgage documents made no provision for this bonus. The judge held that section 17 gives a mortgagor an option to pay 3 months interest or to give 3 months’ notice of its request to pay arrears of principal. It does not give a mortgagee the right to make that decision. Once the mortgagee issued notice of sale, the mortgagor had a right to pay the appropriate amount to redeem the mortgage without the bonus. The decision would probably have been different had the mortgage documents required payment of 3 months interest.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.